Construction World February 2018

WOOD CONSTRUCTION

DOING BUSINESS IN AFRICA “Emerging-market and developing economies are anticipated to grow 4,1% in 2017 – far faster than advanced economies,” says Alex Gray in a World Economic Forum article.

demonstrate our legitimacy and dedication to the project, but because this is also a good litmus test to gauge how serious the client is about investing in the right supplier. You may also have to work with agents who source suppliers for their clients; in both instances, it helps to make sure they are serious about doing business with you,” Slabbert notes. “Get as much information as you can about the prospective client, their agent and the project they have in mind upfront and always insist on trade references. As much as a legitimate company would want to check your references, you need to do the same. In our experience, once all the basics have been covered, a legitimate company will have no problem flying you to the construction site/s and covering all your travel expenses,” he says. Seal the deal According to Slabbert, it is essential to cover all bases and legitimise all business dealings with contractual agreements. This applies to doing business anywhere in the world, not just in Africa and is good practice in general. “Set up your contract to state that your client is to take the risk for any out-of-country expenses and from a construction perspective, have them arrange all material transport, visas, food, accommodation and travel; they will know the local laws and have local connections, which positions them as being able to make these arrangements far easier, more accurately and cost-effectively than you may,” says Slabbert. Materials & logistics When doing construction work abroad in Africa, it is advisable to send more material than is necessary, because it is not always possible to source materials or tools locally. Some countries have the convenience of having a Builders Warehouse, but they may not necessarily always carry the same stock as their South African branches. “Remember, if you use shipping containers, you need to calculate the volume and weights so that you don’t overload the containers. The containers also need to be balanced, with weight distributed as evenly as possible, so that there isn’t too much weight applied to one wheel of the truck carrying the load, for example. "Keep in mind, your material is at risk of being damaged should the need arise for the shipping company to repack everything,” Slabbert cautions.

T his is echoed by the World Bank’s recently published biannual Global Outlook Report which measures economic growth in nearly 200 countries by calculating year-on-year percentage change in gross domestic profit (GDP) and provides growth forecasts for 2017, 2018 and 2019; two African countries, namely Ethiopia and Ghana, have claimed second and third positions in this growth forecast report respectively. It comes as no surprise, then, that many are keen to make their way into these and other emerging markets on the African continent. However exciting the prospect of African trade may be, like anywhere else in the world, it comes with its own set of challenges. South African luxury timber frame and log construction company, Eco Log Homes has been in operation, building across South Africa and further abroad into Africa, for over 17 years. The company’s Managing Director, Werner Slabbert Jnr, shares some tips for doing business in Africa. “A sizeable portion of our work in Africa is for lodges and holiday resorts, which are a popular and fitting choice for investors looking to offer tourists well-built, eco- conscious, luxury accommodation,” says

Slabbert. “But things haven’t always gone strictly according to plan; while we have successfully completed many projects in Africa outside of South Africa’s borders, we’ve learned some hard lessons along the way, which are well worth sharing with anyone looking to conduct business in Africa.” Be courteous but cautious It is not uncommon for business people to believe that huge profits are directly proportionate to the level of risk undertaken in a business deal. “High risk does not automatically equate to high rewards. Be humble and courteous in your venture, but be smart and protect yourself against currency fluctuations,” says Slabbert. “We like to keep our projects ZAR based so that we don’t have to worry about this risk, but for those dealing in foreign currency, it may be advisable to enlist the services of a financial insurance company that can help

you mitigate such risk,” he adds. Get to know your client

Slabbert advises to always meet with an interested client at your offices in South Africa first. “We insist on this initial meeting taking place at our premises, not only to

Eco Log Homes’s Managing Director, Werner Slabbert Jnr.

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CONSTRUCTION WORLD FEBRUARY 2018